MR effects in epitaxial Fe:MgO anti-granular systems, which consist of MgO nanoparticles in an Fe matrix, have been studied at room temperature. Fe and MgO were co-evaporated on MgO(001) substrate in the ratio of Fe:MgO = 4:1, 3:1, and 2:1. The samples were annealed for up to 5 h inducing a uniaxial anisotropy. The saturation magnetization of the samples was found to be up to 20% greater than the value for bulk Fe. This is induced by a moment enhancement at the Fe/MgO interfaces. The corresponding magnetoresistance shows strong isotropic behavior with anisotropic components up to ±0.09% for a magnetic field applied along the hard axis. Very strong uniaxial anisotropy is observed with a hysteresis loop squareness of up to 0.97 for the annealed samples.